IBS forecasts 2003 steel output of 31.2Mt

Brazilian steel sector association IBS forecasts crude steel production will come in at a record 31.2Mt this year, up 5.35% from 2002, and rise another 3.9% to 32.4Mt in 2004, its president Jose Armando Campos told journalists. Output of rolled products is expected to rise 11% in 2003 to 21.1Mt from 19Mt in 2002, and total 23.3Mt in 2004, up 10.5% from the previous year. The sector forecasts 34.7bn reais (US$11.8bn) in revenue for 2003, up 31.4% from the 26.4bn reais grossed in 2002. The forecast for 2004 is for revenue to increase 11.2% to 38.6bn reais. Domestic steel sales are expected to fall 3% to 15.3Mt in 2003 from 15.8Mt last year because of a slowdown in civil construction and infrastructure projects. Sales volumes on the domestic are forecast to rise 14.4% to 17.6Mt in 2004. With the sluggish domestic market, steelmakers have increased exports. Export volumes are forecast to total 13.3Mt in 2003, up 14.2% from 11.7Mt in 2002. Export revenue is expected to finish the year at US$3.9bn, up 34.5% from US$2.9bn in 2002. But export receipts are forecast to fall 10.3% to US$3.5bn in 2004 when volumes sold abroad are expected to drop 8.2% to 12.3Mt. DOMESTIC PRICES With respect to forecast price increases of 11-13% in the next month, Campos said the IBS does not deal with the issue as prices are negotiated on an individual level by its members. But "you cannot discount the impact of input prices, government-controlled prices such as in energy, and freight prices," he said. The IBS president forecasts that coke and coal prices will increase not less than 10% in 2004 and that iron ore prices should rise about the same as the 9% increase seen last year. "Brazil's steel industry is part of the globalized steel industry and subject to international prices," he said. However, Brazilian capital goods maker Abimaq is asking the government to restrict some steel product exports and eliminate tariffs on steel imports that average 12%, in order to reduce price pressures. Campos downplayed Abimaq's complaints. "Our commitment to the government is to attend to domestic demand," said the IBS head, adding that domestic prices will not vary much from international ones. IBS officials said the steel sector is not going to make complaints just because the price of pig iron and steel scrap is increasing. Although the local currency has regained strength over the course of this year, the impact on local domestic prices has been nil, Campos said. "Half of steel costs are in reais and the other half is in dollars," he said.